sed: update 2 similar variables in a file but keep the upper and lowercase

As a rule, you should not embed data in the code arguments of language interpreters whether they’re shells, sed, awk, perl, python, etc.

Doing so invariably introduces command injection vulnerabilities.

So things like sed -e "code $data", sh -c "code $data", eval "code $data", perl -e "code $data" (note the double quotes inside which the $vars are expanded to the contents of the shell variable) should be removed from your vocabulary.

The data should be passed via channels intended for data, not code. sed (contrary to sh, awk and any modern or less modern programming language) doesn’t have such channels, so the only option there is to sanitise that data, but then again there have been better alternatives to sed since the 80s.

Here, you can use:

perl -pi -s -e 's/bsid=K.*/U$value/i' -- -value="$CName" -- "$file"

Note how the code argument is fixed: s/bsid=K.*/U$value/i, and the data (the contents of the $CName shell variable) is passed as a separate non-code argument, one intended to pass values (by assigning to the $value perl variable).

Also note:

• -i (copied from perl) is a non-standard option in sed.
• same for the I flag to the sed command.
• no need for g as the .* will match to the end of the line so there can only be one substitution per line. It could make sense in s/bsid=KS*/U$value/gi where we match sid= followed by any number of non-whitespace characters where it would then change sid=foo SID=bar on a single line to sid=new-value SID=new-value.
• perl (contrary to sed which interpret the input as text encoded in the user’s locale) by default considers each byte as a character, so it will still work correctly if the file contains bytes not forming valid characters in the user’s locale.
• U (from ex/vi) turns what follows to uppercase. Note that by default, it only works for ASCII letters. Also supported by some sed implementations but not all and not standard. Alternatively, you could have the shell convert the value to uppercase with typeset -u CName in ksh/zsh, or use $CName:u in tcsh/zsh or ${(U)CName} in zsh, or ${CName^^} in bash. Those would generally interpret the text in the locale’s encoding and change the case according to the locale’s rules. So for instance, i could be changed to I or İ depending on the locale, and that İ could be encoded as a 0xdd byte or the bytes 0xc4 0xb0 depending on whether the locale uses iso8859-9 or UTF-8 as the charmap for instance.
• note the b for word boundary, so it doesn’t match sid=foo in setsid=foo for instance. Also supported by some sed implementations while some others have </> (from ex/vi) or [[:<:]]/[[:>:]] for that instead.
• K specifies the start of what is to be Kept in the match. With old versions of perl, you’d use s/(sid=).*/$1U$value/i, that is capture the sid= part with parenthesis and recall it in the replacement with $1. Or use a look behind operator s/(?<=sid=).*/U$value/i though makes it look a bit too complex IMO.
• as an alternative to -s with -var=value, you can use environment variables to pass the data: VALUE=$CName perl -pi -e 's/bsid=K.*/U$ENV{VALUE}/i' -- "$file". That would be preferable if the value is sensitive and should not be exposed in the output of ps -Af. That’s also the approach you’d use in awk (ENVIRON["VALUE"] there) as the other value passing channels there mangle data containing backslashes.
• to read an arbitrary string from the user, the syntax in bash is IFS= read -rp 'Prompt: ' var (IFS= read -r 'var?Prompt: ' in other Korn-like shells). But prompting the user is generally not the best approach as it makes your script unnecessarily harder to automate or reuse with the same parameters. It’s generally better to take input as command line arguments, such as you-script thenewCN where the argument is available in $1 or do proper standard command line parsing with the standard getopts builtin.